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Firms shorten IT deals

UK businesses are shortening the length of outsourcing contracts

Businesses have started bringing IT and business process outsourcing
contracts back in-house or signing shorter length external contracts, according
to research from analyst PMP Group.

The analyst questioned 100 UK businesses and discovered that 47 per cent of
respondents were attempting to reactivate services internally. Conversely, 39
per cent admitted that they now expect an outsourcing contract to last between
one and two years, whereas the previous length was about 10 years.

Cliff Mills, research manager at the PMP Group, told CRN that
businesses are gradually becoming wiser in their outsourcing strategies.

“Outsourcing firms will now have to tailor their contracts to each
opportunity and be willing to compete,” he said. “Firms must also be able to
show that their outsourcing deal is able to make improvements and cost savings
on the service, rather than just a standard service level agreement.”

However, the research also discovered that 68 per cent of businesses
attempted to contract services out to multiple suppliers. Just 19 per cent opted
for a single supplier.

In addition, 77 per cent of respondents claimed they intended to use a
multi-sourcing route in the future.

Steve Derbyshire, managing director of VAR
Telamon, believed that the number of
outsourcing contracts seems relatively stable, but said the level of competition
to win contracts is increasing.

“We find that it’s currently quite common for a combination of in-house and
external service providers to be working on the same contract,” he said.